Just ask yourself a question: would you sell your Amazon FBA brand for around 2 million US dollars or more? That is what Amazon aggregator companies have paid to acquire FBA brands in the last two years.
This group of 90-plus venture-backed companies acquiring different Amazon FBA brands has raised more than 13 billion US dollars in funds. The Amazon aggregator market is expected to increase further with more brand acquisitions in the future.
There is a chance that an Amazon Aggregator company can reach you to purchase your business with a good offer in the future.
To ensure that you are ready to have conversations with these Amazon aggregators, we will explain everything you need to know about Amazon aggregators and how you can have the best transaction for your established business.
What is Amazon Aggregator company?
Amazon Aggregators are practicing influential business tactics to generate revenues. The aggregator business model has gained significant influence in the past three years.
Amazon aggregator companies work on the primary goal of acquiring Amazon FBA brands. Aggregators know the power of the FBA business in terms of its potential to generate profits. They also know that it’s a long-term process to make a brand successful from the start. Therefore, these aggregators acquire established brands within the Amazon ecosystem instead of creating brands from scratch.
These aggregator companies buy businesses that are financially strong, and they scale them after acquisition by injecting funds. When they buy niche businesses, it becomes easier for them to cross-sell business products.
For instance, a branded Amazon aggregator company acquired a fitness brand offering different exercise equipment. It makes sense to buy a sportswear brand selling towels or sweatbands that covers their fitness gear niche.
To increase the potential of their acquired assets, these Amazon aggregator companies have talented operational teams who can generate value. They are capable of bringing value in these categories:
- Optimizing PPC ads campaigns
- Completely reshaping brands
- Focusing on hero products
- Enhancing logistics and supply chain management
With the availability of proven and powerful business scaling strategies, these aggregators improve their acquired assets. That helps them secure capital from private equity firms looking for a high rate of return on investment.
Now let’s know what Amazon aggregator company considers a valuable deal.
Amazon Aggregator Company Deal Activities
Amazon Aggregators don’t reveal all their statistics on the size of deals. According to Fortia Group, these are some of the influential statistics that can explain the deal activities done so far:
- 47 percent of the deals were sold between 2 to 5 million US dollars.
- 24 percent of deals were closed under six figures.
- 12 percent of the deals were sold for over 5 million US dollars.
The businesses of different sizes under FBA have a significant chance of acquiring these aggregator companies.
Now Let’s examine what Amazon aggregators look while acquiring a brand?
Amazon Brand Aggregators Acquisition Requirements
All Amazon aggregator companies go through a due diligence process before confirming a deal. In general, FBA aggregators are looking for already established brands with huge demand for products capable of generating a steady income.
FBA Aggregators prefer private label products with high revenue streams instead of wholesale or real arbitrage. Let’s go through the process of due diligence criteria of brand aggregators.
Revenues and annual net profits
Amazon aggregators are willing to acquire companies that make either 1 million dollars in revenues or 20,000 US dollars in annual net profits. In addition, your business should have at least 15 percent profit margins. If the margins are lower than the minimum value, your business will be witnessed as not having enough potential to grow in the future.
It’s not important to have higher profits for being acquired by aggregators. If your monthly net profits are 25,000 thousand US dollars and the value of your business is at 40x multiple, you can sell your business for a minimum of 1 million US dollars.
Private label brands
All the businesses that Amazon aggregators acquire are private label brands. Amazon’s private-label business is more profitable and secure than other types of businesses on Amazon. Within the private label model, you can launch different products and control price, which is difficult in retail arbitrage.
Most importantly, aggregators look for brands with their own labels and sell their unique products.
The small range of SKU
Amazon aggregators prefer the lower number of SKUs for keeping operations simple and managing the brands easily. Higher SKUs means the team has to look after and maintain dozens of SKUs, consuming their time and money.
To manage this, aggregators delist a few SKUs, especially when their contribution is minimal. Managing and optimizing product listing is easier with fewer SKUs.
Majority of the Sales through Amazon
Any Amazon aggregator company usually prefers those businesses that have generated most of their sales from Amazon. However, a few aggregators can agree on low sales percentages through Amazon.
Your business should have a stable income and clearly distinguished products. Your business products should be evergreen in demand. There are less preferred niches that Amazon Aggregators don’t select.
Avoiding selling fad products is important because they can lose their demand in the future.
FBA aggregator companies will consider the quality matters of your product during the business audit.
Always focus on building those products having high quality. Order product samples from different suppliers until you find one that stands according to your requirements.
Once your product quality issues are resolved, you can focus on ranking higher in product categories. If you win a Buy Box or Best Seller badge, this shows high demand for your business products.
If your business has a loyal customer base, it can survive in the long term. That is why branded aggregators look for brands having a loyal customer base.
Providing your customers with attractive discounted deals and offers can help retain your customers for a longer time.
Most aggregators look for those Amazon brands for acquisition selling within the US marketplace. However, some of the aggregators are also looking for European marketplaces.
Amazon Aggregator company acquires your brand and scales it to generate revenues for their investors. Multiple Amazon Aggregators have entered the marketplace and acquired multiple FBA brands.
Is your Amazon FBA brand earning healthy revenues with high net margins? Then Amazon aggregators can buy your brand.